PowerPoint on China

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Slide 2

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INTRODUCTION ndChina's economy is the 2 largest in the world, and iscurrently the fastest growing with an average growth rateof the 10% over the last 10 years. Its economy took a majorchange in direction after Mao's death in 1976, bringing itout of isolation from the rest of the world. There were anumber of economic factors that triggered the positivechange brought about by Deng Xiaoping like the OpenDoor Policy in 1978. Today, China's 21st leaders and tough,focused and determined on economic growth at all costs,but only on China's own terms.…read more

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In 1978 China is competing for significant economic, political and culturalinfluence around the world. As a result, the Open Door Policy wasintroduced by Deng Xiaoping, leader of the Chinese Communist Party. Dengrealised that China needed Western technology and investment, andopened the door to foreign businesses who wanted to set up in China. Chinaopened up their economy to global activities which would make the countrymore efficient. One of these approaches was State-Owned Enterprises(SOE's) which are companies owned by the government (Public Sector inthe UK) to boost China's economy. They were mainly heavy industries suchas oil, chemicals, power, iron and steel. A key incentive towardsindependence in a market economy was enabling SOE's to keep some oftheir profits. however, the books of state-owned enterprises were oftencooked to make the company appear profitable when in really they werelosing heaps. At one point 50,000 state enterprises sucked up 70% of alldomestic loans while producing less than 34% of industrial output. 1…read more

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Therefore, China introduced Special Economic Zones (SEZ's). This is an area inwhich foreign and domestic companies can trade and invest without the samecontrol and regulations from Beijing as other parts of China. Since 1979, fivespecial economic zones and 14 open cities have been proclaimed. The OpenDoor Policy of Deng Xioaping aimed to China benefitted from SEZ's since Itattracted foreign technology and foreign investment, and they are able toopen foreign markets to Chinese goods. For example, Pudong was one ofthese zones on the east coast of China that were it was created to enclaveChina's very fast development. They had a special set of economic regulationsdue to being a Free Trade Zone; infrastructure planning, reduced restrictionson land, labour, wages, taxes and planning regulations and higher wages thanelsewhere in China but cheaper than elsewhere in the world. However, thedevelopment of the eastern coast was at the expense of the interiorsince SEZ are built on agricultural land. The farmers have lost their livelihood asthey are not skilled labourers and it would be tough to relocate them to otherjobs in the area. 2…read more

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Consequently, small local businesses also had to change inorder to match the rate of China's rapid economy growth.Therefore, Township and Village Enterprise (TVE's) werecreated to help keep up China's economy. During Mao's era,rural industries called TVE's produced heavy goods ­ iron,steel, cement, chemical fertilisers, hydroelectric power, andfarm tools. After 1978, they expanded to develop a widerrange of businesses. Many Chinese farmers preferred toinvest their resources in rural industry rather thanagriculture. This encouraged the growth of small businessesrun by the most successful peasants. Thus a newentrepreneurial class began to emerge as TVEs became thebackbone of development in china's economic growth. 3…read more

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China also joined the World Trade Organisation (WTO) in2001. This has been seen generally as a major, positivedevelopment and beneficial to the rest of the world. AfterChina joined the WTO, the service sector wasconsiderably relaxed and foreign investment wasallowed; restrictions on retail, wholesale and distributionended. Banking, financial services, insurance andtelecommunications were also opened up to foreigninvestment. Furthermore, political systems andbusinesses in China had to adapt to westernisedeconomic systems which meant SOE's had to modernisein order to compete. 4…read more